Bank ABC announces Q3 and Nine Months 2022 results with a Year-to-Date net profit of US$114 million attributable to the shareholders of the parent

TDT | Manama                

The Daily Tribune – www.newsofbahrain.com  

Bank ABC (Arab Banking Corporation B.S.C.) - Bahrain Bourse Trading Code “ABC” - today announces its results for the first nine months of 2022.

The Group delivered a robust Q3 performance with nine month’s year-to-date Net Profit attributable to the shareholders of the parent at US$114 million. The Total Operating Income at US$791 million, reflects growth in the Bank’s underlying business across its key markets The Group continues to operate in challenging market conditions with unexpected headwinds from geopolitical developments and persistent high inflation across some markets, being counterbalanced by sustained high oil prices and rising interest rates. The Group has progressed well during the year with the merger of BBE along with the Bank’s digital transformation and other strategic priorities. Bank ABC continues to maintain a strong balance sheet and capital position.

Key performance highlights:

• Net profit attributable to the shareholders of the parent of US$114 million, a growth of 43% compared to previous year.
• Total Operating Income grew by 26% to US$791 million benefitting from consolidation of BBE, higher interest rates and core business volumes.
• Operating expenses at US$494 million were also higher than 2021, with the integration of BBE and the business returning to normal level of activity compared to previous year. The Group remains focused on disciplined cost control while continuing to invest into its strategic projects for accelerating business growth and boosting returns.
• Balance sheet remains strong with capital and liquidity ratios well above the regulatory requirements: the Group’s T1 Ratio is 16.5%, comprising predominantly CET1 14.7%, LCR and NSFR at 220% and 122% respectively.

Bank ABC's Group Chairman, Mr. Saddek Omar El Kaber remarked, “We are extremely pleased with the Group’s performance for the first nine months of 2022. The Group is building on its firm foundation and accelerating revenue growth, generating higher profits during the first nine months of the year.  We anticipate completing the year on a strong footing, positioning us well for the year ahead. The continued focus on the global franchise model with strong balance sheet and digital transformation initiatives provides a robust foundation for Bank ABC’s journey as the bank of the future.  We are delighted with the widespread industry recognition Bank ABC has received recently, including our recent win of the ‘Innovation in Digital Banking Award 2022 for Middle East’ and ‘Transaction Banking Awards 2022, for Middle East’ both awarded by The Banker[i].

A more detailed summary of the Financial Results is explained below:  

Q3 2022 Business Performance

• Consolidated net profit attributable to the shareholders of the parent, for the three months of Q3 2022 was US$44 million, 76% higher compared to US$25 million reported for the same period last year.
• Earnings per share for the period was US$0.01, unchanged from the corresponding period last year.
• Total comprehensive income attributable to the shareholders of the parent was a loss of US$6 million, 79% lower compared to a loss of US$29 million reported for the same period last year, mainly from a net impact of foreign exchange translation in foreign subsidiaries and change in fair value of debt instruments offset by the profit for the quarter.
• On a headline basis, Total Operating Income was US$271 million, 24% higher compared to US$219 million reported for the same period last year benefitting from higher interest rates, higher volumes, and inclusion of three month’s revenue from BBE during this year compared to two months in Q3 2021. On an underlying basis*, Total Operating Income was at US$283 million for the period, a 20% increase on the US$236 million reported for the same period last year.

Net interest income was US$194 million, 22% higher against US$159 million reported for the same period last year,

• benefitting from higher interest rates compared to the same period last year and supported by growing volumes in some of our key markets.
• Operating expenses were at US$163 million, 11% higher than US$147 million for the same period last year, from a combination of consolidation of BBE for full three months opposed to two months during the same period in last year, as well as the Group returning to a more normal level of activity. The Group continues to enforce appropriate cost discipline without compromising on investment into its digital transformation and strategic initiatives.
• On an underlying basis*, the Group achieved a Net Operating Profit of US$111 million for the quarter, 25% higher compared to US$89 million in Q3 2021. Headline Net Operating Profit was US$108 million, 50% higher compared to US$72 million reported for the same period last year.
• Impairment charges (ECL) or credit loss expenses for the quarter were US$27 million compared to US$29 million reported for the same period last year, reflecting the quality of the Group’s asset portfolio and broadly in line with our historic credit loss experience.
• Tax charge for the quarter was US$22 million, compared to US$11 million for the same period last year. The variance largely arising from the tax treatment of currency hedges in Banco ABC Brasil, which have an offsetting impact on Total Operating Income mainly in previous year. On an underlying basis*, tax charge for the period was at US$23 million compared to US$28 million for the same period last year, primarily due to change in profit before tax in overseas subsidiaries.

Nine months 2022 Financial results

• Consolidated net profit attributable to the shareholders of the parent, for the first nine months of 2022 was US$114 million, 43% higher compared to US$80 million reported for the same period last year. 
• Earnings per share for the period was US$0.04, $0.01 better than $0.03 for the corresponding period last year.
• Total comprehensive income attributable to the shareholders of the parent was a loss of US$109 million, compared to an income of US$92 million reported for the same period last year. This arose from a net impact of foreign exchange translation in foreign subsidiaries and change in fair value of debt instruments.
• On a headline basis, Total Operating Income was US$791 million, 26% higher compared to US$626 million reported for the same period last year. On an underlying basis*, Total Operating Income was at US$806 million for the period, 27% higher compared to US$636 million for the same period last year, benefitting from increase in interest rates and consolidation of BBE.
• Net interest income was US$564 million, 35% higher against US$419 million reported for the same period last year, supported by higher interest rates, higher loan volumes and the addition from BBE.
• Operating expenses were at US$494 million, 24% higher than US$400 million for the same period last year, from a combination of consolidation of BBE as well as the Group returning to a more normal level of activity. The Group continues to enforce appropriate cost discipline without compromising on investments into its digital transformation and strategic initiatives.
• Headline Net Operating Profit before credit loss expense and taxation was US$297 million, 31% higher compared to US$226 million reported for the same period last year. On an underlying basis*, the Group achieved a Net Operating Profit before credit loss expense and taxation of US$301 million for the quarter, 28% higher compared to US$236 million for nine months of 2021, benefitting from the addition of BBE and higher interest rates.
• Impairment charges (ECL) for the period were US$78 million at similar level of US$78 million reported for the same period last year, broadly in line with our historic credit loss experience. 
• Tax charge US$64 million, compared to US$47 million for the first nine months of 2021, the variance largely arising from higher profit before tax at Brasil, the tax treatment of currency hedges in Banco ABC Brasil (BAB) which have an offsetting impact in Total Operating Income. On an underlying basis*, tax charge for the period was at US$63 million compared to US$57 million for the same period last year.

Balance Sheet

• Equity attributable to the shareholders of the parent and perpetual instrument holders at the end of the period was US$4,095 million, compared to the US$3,872 million at the 2021 year-end, 6% higher, benefiting from the Additional Tier 1 capital issued during the Q1 2022 and after absorbing dividends paid.
• Total assets stood at US$34.8 billion at the end of the period, comparable to the US$34.9 billion at the 2021 year-end.
• Loans and Advances were 4% higher at US$17.4 billion compared with levels of US$16.7 billion at 2021 year-end reflecting the Group’s selective underwriting and a strengthening in BRL FX rate.
• Deposits were at US$25.2 billion, compared to the levels of US$25.8 billion at 2021 year-end.
• Liquidity ratios are strong with LCR and NSFR at 220% and 122% respectively with comfortable buffer and liquid assets to deposits ratio at 49.7%.
• Capital Ratios strong: CET1 at 14.7%, Tier 1 at 16.5% and total CAR at 17.6%.

Bank ABC is a leading player in the region’s banking industry and provides innovative wholesale financial products and services that include corporate banking, trade finance, project and structured finance, syndications, treasury products and Islamic banking. It also provides retail banking services through its network of retail banks in Jordan, Egypt, Tunisia and Algeria and through ila Bank in Bahrain. The Bank is a renowned leader in digital innovation in banking and is a rising transformational force in the region’s financial services sector.

The full set of the financial statements and the press release are available on Bahrain Bourse’ and Bank ABC websites.